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Filed 8/2/10; pub. order 8/23/10 (see end of opn.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

SERGIO GUTIERREZ et al., B212062

Plaintiffs and Appellants, (Los Angeles County


Super. Ct. No. BC360704)
v.

CALIFORNIA COMMERCE CLUB,


INC.,

Defendant and Respondent.

APPEAL from an order of the Superior Court of Los Angeles County, Aurelio
Munoz, Judge. (Retired judge of the L.A. Sup. Ct. assigned by the Chief Justice pursuant
to art. VI, § 6 of the Cal. Const.) Reversed.
Rastegar & Matern, Matthew J. Matern and Thomas S. Campbell for Plaintiffs and
Appellants.
Winston & Strawn, Anna Segobia Master and Jennifer Rappoport for Defendant
and Respondent.

——————————————
Sergio Gutierrez and Hector Salazar filed the operative third amended class action
complaint against California Commerce Club, Inc. (Club), alleging, among other things,
that they and other similarly situated members of the putative class were injured by the
Club‘s unlawful policy and practice of denying meal and rest breaks to certain hourly,
non-union employees. The trial court sustained the Club‘s demurrer without leave to
amend, on the ground the plaintiffs had failed to show the existence of a class, and
dismissed the action as to all representative claims. We reverse. In this action, as in the
vast majority of wage and hour disputes, class suitability should not be determined on
demurrer.
BACKGROUND
The challenged ruling arises in the context of an order sustaining a demurrer
without leave to amend. Accordingly, we accept as true the factual allegations of the
operative pleading. (Tarkington v. California Unemployment Ins. Appeals Bd. (2009)
172 Cal.App.4th 1494, 1498, fn. 1 (Tarkington).)
Initial complaint
In October 2006 Gutierrez filed a purported class action complaint, alleging three
causes of action stemming from the Club‘s alleged (1) failure to provide Gutierrez and
other non-exempt Club employees with rest breaks and compensation in violation of
Labor Code section 226.7 (section 226.7) and Wage and Hour Order No. 10-2001,
section 12 (Order 10-2001); (2) violation of Labor Code section 2699, the Private
Attorneys General Act (PAGA), for which Gutierrez sought civil penalties; and (3)
unlawful business practices in violation of the Unfair Competition Law (UCL) (Bus. &
Prof. Code § 17200).1 Gutierrez alleged the Club currently employed over 1,000 hourly
employees who, together with similarly situated former employees, had been subjected to

1 Although the cover page also listed a claim for violation of Labor Code section
558, no cause of action for violation of that statute was pleaded in the body of the
complaint.

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the same illegal payroll practices and policies. Gutierrez purported to represent all of the
Club‘s similarly situated employees who were not dealers.2
The Club demurred to the complaint on the grounds that it failed to state facts
sufficient to state causes of action for violations of sections 226.7, 558 and PAGA, was
fatally uncertain as to the scope of the purported class, and that no private cause of action
existed under section 226.7. That demurrer was mooted when Gutierrez filed a first
amended complaint.
First amended complaint
On March 29, 2007, Gutierrez filed a first amended complaint (FAC) premised
again on the theory of missed rest periods and unpaid compensation, and alleging causes
of action for (1) failure to provide rest periods in violation of section 226.7 and Order 10-
2001; (2) violation of PAGA; (3) violation of Labor Code section 588; and (4) unlawful
business practices in violation of the UCL.
The Club demurred to the FAC, arguing it was impermissibly vague, ambiguous
and unintelligible with respect to the group of employees whom Gutierrez purported to
represent. In addition, the Club argued Gutierrez had failed to state facts to constitute
any cause of action, in that he failed to allege whom had been injured by the conduct
about which he complained. Contemporaneous with its filing of the demurrer, the Club
also filed a motion to strike penalties Gutierrez sought pursuant to Labor Code section
558 from the cause of action for violation of the UCL.
The trial court overruled the Club‘s demurrer. Although it described the FAC as
―bottom feeding,‖ and having ―the scooping effect of a swiner or drag net,‖ the court
found the allegations of that pleading minimally adequate, noting there would be ―ample
time later to determine whether there is a single class, several classes and whether this
plaintiff can represent some or all of the classes . . . [and that,] in this case, the statement

2 There are related class action cases pending, at least one of which involves card
dealers. The parties have stipulated the ―dealers are not included among the members of
the putative class [Gutierrez and Salazar] seek to represent‖ here.

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that defendant has not provided its employees with proper rest periods states both the
facts and the theory.‖
Second amended complaint
In February 2008, having received leave of court to do so, Gutierrez filed a second
amended complaint (SAC) adding Salazar as a plaintiff, and adding an additional cause
of action for failure to provide meal breaks and compensation in violation of section
226.7, and Order 10-2001, section 11.
The Club demurred. It argued plaintiffs had failed to satisfy the requirements of
Code of Civil Procedure section 382, and had not stated facts sufficient to state a cause of
action. The Club argued that the allegations purportedly identifying the putative class as
―‗all current and former non-exempt employees‘‖ were insufficient to provide reasonable
notice of (1) an ascertainable class, (2) how the alleged violations occurred as to each of
them, and (3) how the named plaintiffs were ―‗similarly situated‘‖ to the purported class
members and could adequately represent them. The Club also argued the fifth cause of
action for violation of the UCL was redundant of the allegations of the third cause of
action for violation of PAGA.
The trial court sustained the demurrer with leave to amend. It found the SAC was:
―so general that it fails to provide any notice who is in the class, what they do, how they
are related or even what plaintiff [sic] does. It is basically a wide net cast to grab and
catch anyone who is still alive and kicking after . . . [certain] related cases . . . are due for
final approval. What the [SAC] fails to do is notify this court and the defendant who is in
the class. In short the [SAC] is long on allegations, but short on facts. [Citation.] As the
[SAC] now reads, it could cover all of the plaintiffs in the related cases.‖
Third amended complaint
In mid-April 2008, appellants filed the operative third amended proposed class
action complaint (TAC), alleging the same five causes of action as in the SAC. In
contrast to past iterations of their complaint, the TAC contained allegations of fact
regarding the ―Casino department and its various sub departments‖ in which named
plaintiffs Gutierrez (a bus boy and bartender), and Salazar (a cook), worked. The TAC

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listed the representative job positions of over 1,000 hourly employees Gutierrez and
Salazar purported to represent ―includ[ing] but not limited to, bus boys, floor persons,
chip runners, card washers, card muckers, equipment specialists, porters, food and
beverage workers, food service, cooks, cooks helpers, kitchen staff, bartenders, cocktail
servers, transportation workers, security officers, administrative staff, service staff,
housekeepers, engineers, receiving, PBX, purchasing, surveillance, Information
Technology (‗I.T.‘) for a period of time within the four (4) years preceding the filing of
this action.‖ Plaintiffs also alleged that they—and similarly situated class members of
current and former employees who had worked in the Club‘s casino department since
October 2002—were subjected to the Club‘s uniform practice or policy of failing to
provide rest and meal breaks and full wages, in violation of the Labor Code and Order
10-2001. They also alleged violations of the PAGA and UCL.
The Club filed another demurrer. It reiterated its earlier arguments that the TAC
failed to state facts sufficient to state a cause of action, in that its allegations purportedly
identifying the putative class failed to provide reasonable notice of an ascertainable class
or why such class was covered by this action. The Club also argued the TAC contained
insufficient factual allegations to provide reasonable notice to show that Gutierrez and
Salazar were ―‗similarly situated‘‖ to and could adequately represent the putative class
members. Further, the Club argued that the first and second causes of action for failure to
provide meal and rest periods failed, because the TAC failed to allege ―in what manner
the Casino failed to provide rest breaks or how the Casino impeded, discouraged or
dissuaded employees from taking rest periods‖ or ―any facts stating how the Casino
prevented them from taking their meal and rest breaks.‖
The trial court sustained the demurrer to the class action allegations of the TAC
without leave to amend. The court found that notwithstanding four attempts to do so,
Gutierrez and Salazar failed to: ―allege facts sufficient to show the existence of a class.
What they have done is to cast a wide net to cover anyone who is or was an employee
and who is not part of management. What they have failed to do is to notify the court
who is in the class, what they do, how they are related and why plaintiffs are the proper

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persons to represent this all-inclusive class. (See e.g., Kennedy v. Baxter Healthcare
Corp. (1996) 43 Cal.App.4th 799 [(Kennedy)].)‖
The court dismissed the action as to all putative class members, as to the class
representatives and all class-wide allegations. It permitted the action to proceed as to the
two named plaintiffs in their individual capacities. This appeal followed.
DISCUSSION3
1. Standard of review
A demurrer to class allegations may be sustained without leave to amend only if it
is clear ―‗there is no reasonable possibility that the plaintiffs could establish a community
of interest among the potential class members and that individual issues predominate over
common questions of law and fact.‘‖ (Blakemore v. Superior Court (2005) 129
Cal.App.4th 36, 53.) If there is a reasonable possibility the plaintiffs can plead a prima
facie community of interest among class members, ―‗―the preferred course is to defer
decision on the propriety of the class action until an evidentiary hearing has been held on
the appropriateness of class litigation.‖‘‖ (Ibid.; citing Brown v. Regents of University of
California (1984) 151 Cal.App.3d 982, 988.)
On review from an order sustaining a demurrer, we exercise our independent
judgment on whether a cause of action has been stated as a matter of law. (Tarkington,
supra, 172 Cal.App.4th at p. 1502.) ―‗Our task in reviewing a judgment of dismissal
following the sustaining of . . . a demurrer is to determine whether the complaint states,

3 The Club asserts this appeal is from a nonappealable order sustaining the
demurrer to plaintiff‘s PAGA claim. Both assertions are wrong. First, the appeal is from
an order dismissing the action as a representative action, following the sustaining of a
demurrer without leave to amend, after the court found plaintiffs failed to state a cause of
action by virtue of their failure to show the existence of an ascertainable class. The trial
court never addressed the merits of the demurrer with respect to the PAGA claim.
Second, when an order sustaining a demurrer without leave to amend has the effect of
preventing further proceedings as a class action and disposes of the action, it is an
appealable final judgment. (Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th
1320, 1322, fn. 2 (Prince).)

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or can be amended to state, a cause of action.‘‖ (Ibid.; Moore v. Regents of University of
California (1990) 51 Cal.3d 120, 125.) We will affirm if the trial court's decision was
correct on any theory. (Kennedy, supra, 43 Cal.App.4th at p. 808.)
2. Controlling principles
―‗Section 382 of the Code of Civil Procedure authorizes class action suits in
California when ―the question is one of a common or general interest, of many persons,
or when the parties are numerous, and it is impracticable to bring them all before the
court.‖ To obtain certification, a party must establish the existence of both an
ascertainable class and a well-defined community of interest among the class
members. . . . The community of interest requirement involves three factors: ―(1)
predominant common questions of law or fact; (2) class representatives with claims or
defenses typical of the class; and (3) class representatives who can adequately represent
the class.‖ . . . Other relevant considerations include the probability that each class
member will come forward ultimately to prove his or her separate claim to a portion of
the total recovery and whether the class approach would actually serve to deter and
redress alleged wrongdoing. . . .‘‖ (Prince, supra, 118 Cal.App.4th at p. 1324, quoting
Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 434–435, citations omitted.)
Judicial policy in California has long discouraged trial courts from determining
class sufficiency at the pleading stage and directed that this issue be determined by a
motion for class certification. ― ‗In order to effect this judicial policy, the California
Supreme Court has mandated that a candidate complaint for class action consideration, if
at all possible, be allowed to survive the pleading stages of litigation‘ [Citations.]‖
(Tarkington, supra, 172 Cal.App.4th at p. 1510.)
The wisdom of permitting the action to survive a demurrer is elementary. ―‗Class
action litigation is proper whenever it may be determined that it is more beneficial to the
litigants and to the judicial process to try a suit in one action rather than in several
actions. . . . It is clear that the more intimate the judge becomes with the character of the
action, the more intelligently he may make the determination. If the judicial machinery
encourages the decision to be made at the pleading stages and the judge decides against

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class litigation, he divests the court of the power to later alter that
decision . . . . Therefore, because the sustaining of demurrers without leave to amend
represents the earliest possible determination of the propriety of class action litigation, it
should be looked upon with disfavor.‘ [Citation.]‖ (Tarkington, supra, 172 Cal.App.4th
at p. 1511; see also Prince, supra, 118 Cal.App.4th at p. 1326.)
The Club is correct that there are circumstances in which granting a motion to
strike or sustaining a demurrer without leave to amend a class action complaint will be
appropriate. A review of the cases in which courts have approved the use of demurrers to
determine the propriety of class actions, however, reveals that the majority of those
actions involved mass torts or other actions in which individual issues predominate.
Kennedy, the authority on which the trial court relied to buttress its decision to
sustain the Club‘s demurrer without leave to amend, is illustrative. Kennedy was a mass
tort class action against manufacturers, distributors and sellers of latex gloves, in which
the proposed class consisted of health care workers across California who allegedly
sustained injuries as a result of allergic reactions from repeated exposure to the gloves.
(43 Cal.App.4th at p. 803.) The action was unsuited to class action treatment because
―[i]ndividual questions clearly predominate[d] in determining liability, causation,
damages and defenses.‖ (Id. at p. 810.) Similar cases have reached similar results. (E.g.,
Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 1233–1234
[proposed class consisted of disabled students who had allegedly been beaten, abused and
publicly humiliated, so that separate issues in that ―mass-tort action‖ were
―overwhelmingly numerous and substantial when compared to the few issues‖ common
to the class and, even if it could be determined the district‘s policies and practices
encouraged abuse of students, ―this determination could not resolve the lawsuit, which
would still require a full trial on each and every alleged incident of abuse with respect to
fault, causation, damages, and affirmative defenses‖]; Silva v. Block (1996) 49
Cal.App.4th 345, 352 [affirming sustaining of demurrer where proposed class consisted
of people wrongly and unjustifiably attacked by police dogs; question of liability to
individual class members ―would depend upon the particular conduct in which the

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suspect was engaged and the facts apparent to the handler before the police dog was
employed‖]; Brown v. Regents of University of California, supra, 151 Cal.App.3d at
pp. 986, 989–990 [determination of class status on demurrer proper where proposed class
consisted of those injured by hospital‘s failure to provide adequate coronary care; case
presented ―a veritable quagmire of tough factual questions‖ that could only be resolved
by individual proof, as opposed to a ―relatively simple consumer fraud action‖).
By contrast, the operative pleading here does not demonstrate that individual
issues affecting the Club‘s liability will likely predominate. There is no discernible
difference between this action and the wage and hour cases (or their type) at issue in
Prince and, more recently, in Tarkington. As we explained in Prince and reiterated in
Tarkington, such cases ―‗routinely proceed as class actions‘ because they usually involve
‗―a single set of facts applicable to all members,‖‘ and ‗―one question of law common to
class members.‖‘‖ (Tarkington, supra, 172 Cal.App.4th at p. 1511, quoting Prince,
supra, 118 Cal.App.4th at pp. 1327–1328.) As long as the lead plaintiff ―‗alleges
institutional practices . . . that affected all of the members of the potential class in the
same manner, and it appears from the complaint that all liability issues can be determined
on a class-wide basis,‘‖ no more is required at the pleading stage. (Tarkington at
p. 1511.)4

4 Numerous courts have reached the same result in wage and hour cases and other
actions in which the defendant‘s liability to the class as a whole can be determined by
reviewing facts common to all. For example, in Rose v. City of Hayward (1981) 126
Cal.App.3d 926, the proposed class consisted of retired employees and the survivors of
deceased employees. The court found that ―[t]he one decisive issue pervading the
litigation, whether the class members have been wrongfully deprived of pension benefits
by an improper method of computation, will not be decided on the basis of facts peculiar
to each class member, but rather, on the basis of a single set of facts applicable to all
members. Thus, [the] action involves only one claim which turns on only one question of
law common to all class members. Consolidation in a class action thereby creates
substantial benefits for both the parties and the courts in that class action disposition
averts the unnecessary risk of numerous and repetitive administrative and judicial
proceedings with the attendant possibility of inconsistent adjudication.‖ (Id. at p. 933;
see also Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 579 [class action proper

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This case falls squarely into that category.5 Appellants have alleged that, pursuant
to a Club policy or practice, they and similarly situated hourly, non-union employees
have been denied meal and rest breaks to which they are legally entitled, or compensation
therefor. On these allegations, it is clear that the Club liability, if any, to the class as a
whole, can be determined by reviewing a single or set of facts common to all.

for past and present agricultural employees claiming entitlement to compensation for
time spent going to and from employer's fields]; Madera Police Officers Assn. v. City of
Madera (1984) 36 Cal.3d 403, [class action proper for police officers seeking payment of
overtime wages, an accounting, and declaratory relief]; Daar v. Yellow Cab Co. (1967)
67 Cal.2d 695, 713–714 [class of taxicab users seeking recovery for overcharges by taxi
company; allegations established a well-defined community of interest in questions of
law and fact affecting the class, including that each class member was known to the
defendant and the exact amount of overcharge could be ascertained from defendant‘s own
records or other information within its knowledge]; Jaimez v. Daiohs USA, Inc. (2010)
181 Cal.App.4th 1286, 1300–1306 [common issues of fact and law predominate in
putative class action by sales representatives alleging failure to pay overtime or provide
meal or rest breaks]; Parris v. Superior Court (2003) 109 Cal.App.4th 285 [class action
proper by group of employees alleging violations of state wage and hour laws regarding
overtime compensation]; Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805 [class
action proper to recover for alleged nonpayment of overtime compensation]; Wilner v.
Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952 [demurrer improperly sustained in class
action composed of persons who had purchased whole life insurance policies as a result
of defendant‘s allegedly deceptive practices].) In these cases, class suitability issues were
decided after the pleading stage. (But see Alvarez v. May Dept. Stores Co. (2006) 143
Cal.App.4th 1223, 1233–1238 [in which our colleagues in Division 4 affirmed the trial
court‘s order sustaining demurrer in a wage and hour class action, based on collateral
estoppel; identical class of plaintiffs had already been denied certification after full
evidentiary hearing in related case].)
5 The trial court found far the less specific allegations minimally adequate when it
overruled the Club‘s demurrer to the FAC. At that time it noted, correctly, that there
would be ―ample time later to determine whether there is a single class, several classes
and whether this plaintiff can represent some or all of the classes . . . [and that,] in this
case, the statement that defendant has not provided its employees with proper rest periods
states both the facts and the theory.‖ The record reveals no explanation for the court‘s
abrupt reversal of course in sustaining demurrers to the SAC and TAC, which contain
virtually identical (or more specific) allegations.

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The Club points to the recent decision in In re BCBG Overtime Cases (2008) 163
Cal.App.4th 1293 (BCBG), to support its assertion that the trial court acted appropriately
by deciding the sufficiency of the class action allegations on demurrer. The court in
BCBG did observe that ―if the defects in the class action allegations appear on the face of
the complaint . . . the putative class action may be defeated by a demurrer or motion to
strike.‖ (Id. at pp. 1298–1299.) But the Club ignores pivotal distinctions between this
case and BCBG.
BCBG involved a motion to strike in a case that had been pending for four years
since the filing of the initial complaint. During the 33 months between the filing of the
operative complaint and the motion to strike, the parties had ―been engaged in ‗an
extensive law and motion battle regarding the identity of members of the putative
class . . . .‘‖ (BCBG, supra, 163 Cal.App.4th at p. 1300.) And, most importantly for our
purposes, the ―‗motion to strike‘‖ in BCBG was ―not a motion to strike used during the
pleading stage of a lawsuit in both California and federal procedure. (Code Civ. Proc.,
§ 435; Fed. Rules Civ. Proc., rule 12(f).)‖ (Id. at p. 1299, italics added.) Rather, it was a
motion filed under California Rules of Court, rule 3.767, ―seeking to have the class
allegation stricken from the complaint by asking the trial court to hold an evidentiary
hearing and determine whether Plaintiffs‘ proposed class should be certified.‖ (Ibid.)
The BCBG court ultimately observed and adhered to the abiding rule that ―[c]lass
certification is generally not decided at the pleading stage of a lawsuit,‖ and the
―‗preferred course is to defer decision on the propriety of the class action until an
evidentiary hearing has been held on the appropriateness of class litigation.‘‖ (Id. at
p. 1298.) BCBG has no bearing here.
We return again to and rely upon the well-established principle, that ―only in mass
tort actions (or other actions equally unsuited to class action treatment) [should] class
suitability . . . be determined at the pleading stage. In other cases, particularly those
involving wage and hour claims, [such as the instant action,] class suitability should not
be determined by demurrer.‖ (Prince, supra, 118 Cal.App.4th at p. 1325, italics added;
see also Tarkington, supra, 172 Cal.App.4th at p. 1512.)

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We will reverse the order dismissing the action following the sustaining without
leave to amend of the demurrer to the TAC based on the trial court‘s finding that the
pleading failed ―to allege facts sufficient to show the existence of a class.‖It was
premature for the trial court to make determinations pertaining to class suitability on
demurrer. The allegations of the operative complaint are sufficient to move the action
beyond the pleading stage.6
DISPOSITION
The order dismissing the action as to all putative members of the alleged class and
as to all representative and/or class allegations is reversed. Appellants shall recover costs
on appeal.
NOT TO BE PUBLISHED.

JOHNSON, J.

We concur:

MALLANO, P. J.

CHANEY, J.

6 The trial court never reached the merits of the Club‘s argument on demurrer
regarding appellants‘ failure to state a cause of action for violation of the PAGA. Our
resolution of this appeal renders it unnecessary for us to do so. Accordingly, we need not
take judicial notice of the legislative history of Senate Bill 796, and the Club‘s request
that we do so is denied.

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

SERGIO GUTIERREZ et al., B212062

Plaintiffs and Appellants, (Los Angeles County


Super. Ct. No. BC360704)
v.
CERTIFICATION AND
CALIFORNIA COMMERCE CLUB, ORDER FOR PUBLICATION
INC.,

Defendant and Respondent.

The opinion in the above-entitled matter filed August 2, 2010, was not certified for
publication in the Official Reports. For good cause it now appears that the opinion
should be published in the Official Reports and it is so ordered.

JOHNSON, J. MALLANO, P. J. CHANEY, J.

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